The rising price of fuel has been identified as the culprit behind inflation in Laos, causing the government to take steps to address this economic risk.

According to the latest report from the Lao National Statistics Bureau, inflation has risen by 1.88%, due to the rising price of fuel, which apparently is the main force behind the rise in the general prices of other consumer goods.

The price of fuel in Laos has increased by 17.15% compared to last year. The increase drove up the consumer price index of the transport sector by 3.61% compared to the previous year, stated the report. Over the past few months, the government has adjusted the price of fuel several times. It noted that the rising price of fuel on the global market was the main reason why the government intervened.

Another factor driving up inflation in April was the depreciation of the kip against international currencies, most notably the Thai baht and US dollar. Laos imports most consumer goods from neighboring countries, mainly Thailand. When the kip depreciated against the baht, the price of imported goods increased and this further exacerbated inflation.

Data collected by the statistics bureau from the Bank of Laos showed that the value of the kip fell by 11% compared to the last year.

Alongside the increasing price of fuel and imported goods, the price of other goods and services remained stable or low, the bureau said, adding that they did not have much impact on the inflation rate.

According to the bureau, the year-on-year change in the Consumer Price Index of household goods was 1.44%, while the index of the clothes and shoes category saw a year-on-year change of 4.76%. The year-on-year change of the restaurant and hotel category index was 3.13%.

Responding to the troubling inflation rate, the government cabinet instructed the Ministry of Industry and Commerce and the Ministry of Agriculture and Forestry to regulate the price of food items. The commerce ministry has listed a number of goods for which distributors need to seek permission before increasing their price. These include steel, cement and petrol.

The agriculture ministry has been urged to introduce measures to boost agribusiness output to supply more food to markets.

Source: Vientiane Times

The US$25 million Lao PDR Agriculture Competitiveness Project aims to help over 140,000 people by making the planting of rice, maize, and vegetables more productive and profitable. The agreement was signed on Thursday by the World Bank Country Manager Inguna Dobraja and Finance Vice Minister Thipphakone Chanthavongsa.

The project is intended to support 28,000 farming households in 224 villages to improve yields and product quality, increase labor productivity and crop sales, and link farmers with agribusinesses. The project will also increase access to high quality seeds, irrigation, advisory services and markets, further reducing transaction costs and enable higher returns for farmers.

Laos’ agricultural sector is facing serious challenges in meeting the demand of both international and domestic markets, due to problems in farm productivity, produce quality, and fragmentation of value chains.

The project seeks to address these challenges by: promoting best practices in farming to improve the quality of produce and reduce costs; linking farmers to agribusinesses to improve marketing; and shifting to more modern and environmentally-friendly processing facilities and technologies to improve product value and reduce losses.

Strengthening the enabling environment envisaged under the project will also help reduce the costs of doing business in the agriculture sector.

“Many people in the Lao PDR are still employed in agriculture, so it is critical for us to support this sector, to make it more efficient, competitive, and environmentally friendly,” said Dobraja who is the World Bank Country Manager for Cambodia, representing the Country Director for Myanmar, Cambodia, and Laos.

“In addition to the economic benefits received by farming families, agribusinesses and retailers, this project will support improved nutrition by increasing the diversity of fresh produce available for a more nutritious diet,” she added.

Through diversified production, the project will combat stunting, which affects over 40% of children under five in the country. The project will encourage rural households to diversify their diets, improve cooking and processing of food, and reduce women’s time in farming through the use of modern machinery.

Farmers will also use climate smart technologies to develop cleaner and higher value agricultural products.

Locations for the project, to be implemented through 2024, include Khammouane, Bolikhamxay, Sayaboury, Vientiane (province), and Vientiane Capital.

The World Bank supports Laos through its Country Partnership Framework 2017-2021, which is organized around three focus areas of inclusive growth, investing in people, and protecting the environment, all of which will be supported through the new agriculture project.

Source: KPL